EghtesadOnline: Sanctions imposed on Iran by the United States offer an opportunity for Europe to develop its own independent financial institutions, France’s Finance Minister Bruno Le Maire said.

“I am convinced that the outcome of that crisis with Iran will be the chance for Europe to have its own independent financial institutions so we can trade with whoever we want,” Le Maire said at the Globsec Tatra Summit conference in Slovakia’s Strbske Pleso on Friday, Reuters reported.

US President Donald Trump announced on May 8 his withdrawal from the nuclear deal Iran signed with world powers in 2015 (formally known as the Joint Comprehensive Plan of Action) and promised to return harshest sanctions in history against Iran.

The first round of renewed sanctions entered into effect in August. The unilateral US sanctions reimposed on Aug. 7 prohibit Iran's purchase of US dollars and precious metals, part of a larger move that attempts to cut the country off from the international financial system, according to Financial Tribune.

A second tranche of US sanctions on Iran's oil and gas sector are set to go into effect on Nov. 4.

However, other signatories to JCPOA have been looking for ways of safeguarding the landmark deal, which has seen international sanctions against Iran lifted in exchange for the country to limit the scope of its nuclear program.

> Special Purpose Vehicle

The foreign ministers of the EU, Germany, France, Britain, Russia and China agreed recently to set up a new mechanism to facilitate trade between European companies and Iran to bypass United States sanctions.

As such, a new legal entity will be created to allow financial transactions with Iran between oil companies and other businesses.

Credits for oil or goods imported from Iran by one EU firm could be used to pay an EU exporter for its goods or services to Iran, without any funds being sent to the Middle East state.

The SPV would operate in euros rather than US dollars and US authorities won't be able to scrutinize transactions, unlike the SWIFT system, which is fully transparent.

Federica Mogherini, the European Union’s foreign policy chief, says a so-called "Special Purpose Vehicle" under consideration to facilitate trade with Iran could be in place “before November”.

European diplomats have described the SPV proposal as a means to create a barter system, similar to one used by the Soviet Union during the Cold War, to exchange Iranian oil for European goods without money changing hands.

> Blocking Statute

The SPV will operate, in addition to the Blocking Statute that Brussels passed in August, which stops European companies from complying with the US sanctions unless they have authorization from the commission.

National governments could impose “effective, proportionate and dissuasive penalties” on any of their companies that cave in.

The statute also blocks the effects of US court actions in Europe and allows European firms to recover damages arising from the sanctions from anyone who causes them.

“It [the Blocking Statute] also forbids EU persons from complying with those [US] sanctions unless exceptionally authorized to do so by the commission,” European Commission Spokeswoman Mina Andreeva said on August 6.

She said such exceptions can be made in cases where “non-compliance seriously damages their interests or the interests of the European Union”.

The commission says US sanctions are illegal, stressing that it intends to maintain trade and economic relations with Iran.

“It is not up to Washington to decide whether we are allowed to trade with Iran,” Le Maire said.

The Blocking Statute also means that EU firms won’t be able to react to the American threat without facing penalties at home.

The European Commission said it will grant exceptions, if the company can prove that it is leaving Iran for reasons not linked to the US threat.

“If the authorization is rejected, then the company shall not comply with US law and if it does, it is subject to the penalties foreseen by each member state,” an EU senior official has been quoted as saying.

Fines vary from EU state to EU state, and must be “effective, proportionate and dissuasive”.

The Blocking Statute applies to anyone, foreign or otherwise, who is a resident in the European Union and also does business in Iran. This includes companies incorporated in the EU and ships registered in an EU state or fly an EU member state flag.

Nathalie Tocci, an aide to EU foreign policy chief, has characterized the measures as an attempt to “protect European companies”.

Tocci said the move was “necessary in order to signal, diplomatically, to the Iranians that Europeans are serious” about trying to salvage the Iran nuclear deal.

According to Mogherini, trade between Iran and the EU “is a fundamental aspect of the Iranian right to have an economic advantage in exchange for what they have done so far, which is being compliant with all their nuclear-related commitments”.

Latest Eurostat data show trade between Iran and the 28 member states of the European Union during the first half of 2018 amounted to more than €8.3 billion, registering a 12.8% decrease compared with last year’s corresponding period.

Iran exported €4.68 billion worth of commodities to EU member states during the period, indicating a 2.2% fall and imported €3.61 billion in return, down 23.7% year-on-year.